Salesforce.com (CRM) was reviewed in June when I wrote that "Prices are still in an uptrend but the momentum indicator tells us that the pace of the rally has slowed. Traders should raise their sell stop protection to $120 from $115. Prices could still reach our $140 target or even $150 but that doesn't mean we should ignore the indicators and forget about risk parameters." Prices reached out $140 price target later in June and just pennies short of our $150 target in July. Some weakness is appearing now as prices are (so far) making a lower high this month. Let's look closer.
In this daily bar chart of CRM, below, we can see some developing weakness from July to August. Prices tested the rising 50-day moving average line earlier this month and then rallied to a lower high half way through the month. The rising 50-day average line is now only a few dollars below the price action and could be tested again and maybe broken. The trading volume has slowed from late May and the On-Balance-Volume (OBV) line has been stalled since June suggesting that buyers and sellers are roughly in balance at current price levels. The Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in July and could turn lower for a test of the zero line.
In this weekly bar chart of CRM, below, we see a mixed picture with our favorite indicators. Prices are above the rising 40-week moving average line - maybe too far above the line. The weekly OBV line shows a dip in July which suggests a slight increase in selling. The trend-following Moving Average Convergence Divergence (MACD) oscillator has narrowed towards a possible take profits sell signal (a sell signal when the stock is still in an uptrend).
In this Point and Figure chart of CRM, below, the computer program can up with a downside price target of $124.85.
Bottom line strategy: CRM has rewarded patient investors the past two years. Some weakness has appeared on our indicators and a downside price target on the Point and Figure chart that could mean a test of the 200-day moving average line in the weeks ahead. A close below the late July low around $135 will weaken the picture